ACIT CORPORATE CIRCLE 5(2), CHENNAI vs. RUPA HOLDINGS PVT. LTD., CHENNAI

This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) -3, Chennai, dated 26.12.2018 and pertains to assessment year 2015-16.

Shri AR.V. Sreenivasan, the Ld. Departmental Representative, submitted that the assessee itself while filing return of income, disallowed the interest expenditure for earning exempted income. Therefore, according to the Ld. D.R., the Assessing Officer found that while computing the book profit under Section 115JB of the Income-tax Act, 1961 (in short 'the Act'), the disallowance made under Section 14A of the Act was not considered. On a query from the Bench while computing book profit under Section 115JB of the Act, whether disallowance made under Section 14A of the Act has to be added back or not? The Ld. D.R. very fairly submitted that this Tribunal consistently taking a view that disallowance made under Section 14A of the Act need not be added back while computing book profit under Section 115JB of the Act.

We heard Sh. N. Devanathan, the Ld.counsel for the assessee also. According to the Ld. counsel, the assessee has not earned exempted income, therefore, the CIT(Appeals) by placing reliance on the judgment of Madras High Court in Redington (India)

We have considered the rival submissions on either side and perused the relevant material available on record. The Assessing Officer specifically added the disallowance made under Section 14A of the Act while computing book profit under Section 115JB of the Act. This Tribunal is of the considered opinion that the disallowance made under Section 14A of the Act cannot be added back to the book profit under Section 115JB of the Act. The CIT(Appeals) also found that there was no taxable income earned by the assessee during the year under consideration. Therefore, by placing his reliance on the judgment of Madras High Court in Redington (India) Ltd. (supra), the CIT(Appeals) allowed the claim of the assessee. This Tribunal is of the considered opinion that whatever disallowance made by the Assessing Officer, including the interest expenses under Section 14A of the Act, cannot form part of book profit under Section 115JB of the Act. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

In the result, the appeal filed by the Revenue is dismissed.